(Adds advisors on deal, last paragraph)
HONGKONG/LONDON, Jan 20 (Reuters) - Hong Kong's Cheung KongInfrastructure Holdings Ltd, backed by Li Ka-shing,Asia's richest man, has bought Britain's Eversholt Rail for anenterprise value of 2.5 billion pounds ($3.8 billion), thelatest in a string of Asian buyers targeting European assets.
UK private equity fund 3i Infrastructure Plc said onTuesday that it and Eversholt's other investors had sold theirentire holding to the Hong Kong billionaire' s CKI group.
Eversholt owns around 28 percent of the UK's passengertrains, with 19 fleets. It is one of the UK's three leading railrolling stock companies.
3i, Morgan Stanley Infrastructure Partners, and STAR CapitalPartners with its co-investor PGGM, acquired the business for2.1 billion pounds from HSBC in 2010.
Unlike most private equity funds, which usually holdinvestments for between four and six years, infrastructure fundsgenerally hold their assets for longer periods of time as theyare seen as steady, low-risk investments.
"While 3i Infrastructure generally aims to hold its Coreinvestments over the long term, it will sell investments fromtime to time where this generates significant additional valuefor shareholders," said Peter Sedgwick, Chairman at 3iInfrastructure.
"It is in this context that we have taken the decision tosell our shareholding in Eversholt Rail."
The sale of 3i's stake will generate around 358 millionpounds, it said, as well as a 15.5 million pound sum received inDecember. A source close to the deal said that STAR, a Londoninvestment fund manager, would make a return of 3.4 times itsinvestment.
Another source familiar with the matter said that CKIpre-empted an auction process for Eversholt after losing out onthe sale last year of Porterbrook, another UK rail rolling stockcompany.
Eversholt, Angel Trains and Porterbrook have dominated themarket since 1994 when the UK government privatised thecountry's railways. The companies have proved attractive toinvestors for their steady income, longer-term leases and thecountry's growing numbers of rail passengers.
Eversholt had core earnings (EBITDA) of 263.2 million poundsin 2013, according to its website. The price of 2.5 billionpounds values Eversholt at about 9.5 times earnings beforeinterest, tax, depreciation and amortisation.
CKI also looked at Dublin-based aircraft lessor Awas, whileother Asian buyers have sought out Western deals. Last yearReuters reported that China Investment Corp and AVIC, a Chinesestate-owned aerospace and defence company, had been in talks toacquire private equity-backed Irish aircraft leasing firmAvolon.
CKI was advised by RBC. 3i was advised by Rothschild, MorganStanley by Citi, and STAR Capital by Macquarie, twosources said.
($1 = 0.6605 British Pounds)